Banks must adapt products to tourism sector – UMB boss


Commercial banks in the country must adopt strategies based on suitable methodologies for tourism product development in order to grow the sector, create jobs and improve livelihoods, Chief Executive Officer of UMB John Awuah has said.

The World Tourism Organisation (UNWTO), a UN agency, describes tourism as the largest industry in the world. However, credit advanced to the industry by universal banks in the country has been insignificant.

Credit advanced to the recreational sub-sector in Ghana was only 6.8% of the total GH₵7.95bn credit advanced to the services sector in 2017.  This was, in fact, a decline of the 7.3% recorded in 2016.

“The commercial banking system does not make special provisions for tourism projects. All requests for loans are assessed according to their financial viability. The banks, like all commercial financial agencies, also require some collateral and owner equity.

“Inadequate understanding of the industry’s economics by financial industry players also serves as a big hurdle to financing of the industry,” Mr. Awuah said.

In Ghana, the hotels & restaurants sub-sector in Ghana grew modestly by 1.4% year-on-year as at 3rd quarter 2017. Community, Social & Other Personal Service Activities also grew, by 1.7% year-on-year over the same period.

To turn around the fortunes of this labour-intensive sector to create jobs and improve livelihoods, Mr. Awuah argues that: “Tourism is one of the key industries driving change in the continent of Africa, and it provides multiple opportunities for economic growth and improved livelihoods.

“Among the reasons to develop tourism are the following: creation of jobs, economic development; improvement of infrastructure; increasing domestic consumption and exports diversification; cultural heritage and environmental preservation; and empowerment of women, the youth and marginalised people, amongst others.”

The astute banker was speaking at the Ghana Tourism Development Company (GTDC) and the Ghana Investment Promotion Centre’s (GIPC) 2-day panel discussion on how to attract investment into the tourism sector.

He advised banks that to “explore the opportunities available in the tourism industry, we must adopt clear strategies based on suitable methodologies for tourism product development. An example is the UNWTO Prototype methodology which involves: 1. Discovery phase, 2. Technical design, 3. Business plan development, 4. Going live and 5. Supervision and improvement processes”.

The need for private sector participation in growing the sector is more pressing now, given the limited funding from central government and growing unemployment in the country.

In the 2018 Budget GH₵75million was allocated to the sector, out of which about GH₵18million is to be used for capital expenditure – leaving just GH₵57million for all activities of the 12 departments and agencies under the Tourism Ministry.

The sector, according to the World Travel and Tourism Council data, directly created over 107 million jobs – and supported, directly and indirectly, a total of 284 million jobs. This is equivalent to one in 11 jobs in the world.

By 2026, the sector is expected to employ over 370 million people worldwide; representing one in nine jobs worldwide.

Ghana doesn’t feature in the top non-G20 economies with strong growth. Kyrgyzstan, Myanmar, Tanzania, Vietnam and Zambia are expected to show the strongest growth.

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